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Walkom: Why the fixation on Chinese investment in Canada?

The right is up in arms against Chinese investment in Canada. So is the left. What gives?

The Conservatives will soon tweak Canada’s laws to discriminate against foreign investors that happen to be state-owned, including the China National Offshore Oil Co., which has applied to buy an oilsands producer.
(CLARO CORTES IV / REUTERS file photo)

But if rumblings from Ottawa are correct, then this same pro-business government will soon tweak Canada’s laws to discriminate against foreign investors that happen to be state-owned.

The target of any such changes are said to be Chinese state-owned oil companies—particularly the China National Offshore Oil Co., which has applied to buy a Canadian oilsands producer.

It’s easy to see why hard-line ideologues would oppose state-owned firms. The right-of-centre Fraser Institute has already come up with a dubious justification — that private companies are somehow more beneficial to society than those that happen to be publicly owned.

But most Canadians have direct experience with state-owned firms (or, as we call them, Crown corporations) and know that this is not true.

Is public Ontario Power Generation a more malevolent electricity producer than private Bruce Power? Has service on Air Canada improved since the Crown corporation was privatized?

Is Norway’s government-owned Statoil, which has interests in the oilsands and off the Newfoundland coast, more of a threat to Canada than private Shell or Exxon?

True, Chinese state-owned companies operating in Canada would be obliged to follow the dictates of a foreign government in Beijing. But so would privately owned Chinese firms.

In the same way, private U.S. companies must follow the dictates of a foreign government in Washington.

The most recent example of this is the U.S.-owned manufacturer Esco Corp., which is under investigation by American authorities because its Canadian subsidiary bought nickel from Cuba in defiance of Washington’s boycott of that country.

In 2002, privately owned General Motors — under orders from the U.S. government — removed 170 Canadian workers from their jobs at a defence plant in London, Ont., because they were dual citizens.

So, yes, foreign companies follow the laws in their home countries — whether they are privately or publicly owned.

The fuss over a proposed foreign investment promotion and protection agreement, or FIPA, between Canada and China is equally curious. May argues, correctly, that the deal would allow Chinese firms operating in Canada to demand compensation from any government whose laws or regulations interfered with their profitability.

That’s true. But it’s not unique. The 24 investment pacts that Canada has signed since 1990 — with countries ranging from Russia to Venezuela — all allow similar claims. Such agreements are, by definition, intrusive.

The granddaddy of such pacts is NAFTA, which U.S. firms have used numerous times to win compensation from Canadian governments.

Certainly, the proposed China-Canada pact continues in this tradition. Yet as even May acknowledges, it contains stronger environmental protection language than NAFTA and specifically allows governments to undertake measures “relating to the conservation of living or non-living exhaustible natural resources” without fear of being sued — as long as these measures treat all firms equally.

When the environmental group ForestEthics Advocacy says the proposed pact “allows the Chinese government or corporate investors to sue Canadians because they don’t like the strong laws we put in place to protect our environment,” it’s just wrong.

I can understand staking out a political position opposed to all foreign investment agreements.

And I can understand taking exception to countries (including Saudi Arabia, the United Arab Emirates and most of Africa) that are not democratic.

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